Opinion: 5 reasons why the housing crisis can't be blamed on Labour

  • 05/09/2016
Opinion: 5 reasons why the housing crisis can't be blamed on Labour

By Chris Holden

Dear John,

Last week you blamed Helen Clark's Labour government for the housing crisis and it was hypocrisy of the highest order.

You are right, Helen did next to nothing when it came to addressing rising house prices, but you were the 40-something-year-old who stood at Burnside Rugby Club in 2007 and told New Zealand it's not good enough.

You promised "a fair go" and "results" for all New Zealanders.

I don't know if you call the lowest homeownership rate in more than 50 years, families living in cars and a million-dollar average house price in Auckland "results", but I certainly don't.

So, here are five reasons other than blaming Labour that you might want to explore.

1. Foreigners are scooping up our houses and paying no tax

John, you are seriously kidding yourself if you believe just 3 percent (1749) of houses sold between April and June are being purchased by foreigners.

How about you add the 2300 properties sold to non-residents and the 5700 properties sold to buyers with temporary visas who don't intend to occupy their property and suddenly it becomes about 13 percent, not three percent. 

It's not hard to work out why ordinary hard-working Kiwis are getting shafted at auction by wealthy foreigners - New Zealand is an investor's dream.

Why? Because we have no capital gains tax, no stamp duty (one-off tax) for foreigners or limit on foreign property numbers.

2. We needed 3000 trade apprentices yesterday

According to the Auckland Unitary Plan, the city needs to build 51 houses a day, but presently we are building just 19.

Since 2008, the number of apprentices has fallen from a total of 9800 to just 5000 in 2016.

That means the current labour market is only able to support the building of 15,000 houses per year, but demand is expected to hit 28,000 next year.

As a result we will build 13,000 fewer houses next year purely because we don't have enough tradesmen.

Fully funded apprenticeships would go a long way towards incentivising young people into the trades and away from debt-heavy student loans.

3. It's okay for rich investors to pay zero tax on land-banked land, but ordinary folk have to pay tax on every dollar they earn

Unlike Australia, the United Kingdom, Ireland and numerous other countries, New Zealand does not tax vacant land.

Nor do we have any restrictions on the period of time that large blocks of land can remain vacant.

This incentivises investors to sit on parcels of land and watch the value skyrocket.

Land like the empty section in Haverstock Road in Sandringham, which has consent to have 50 houses built on it. It has sat empty for three years, and under the current rules it will sit empty for the foreseeable future.

I'm sorry John, but having Housing Minister Nick Smith pen a few letters to developers asking them to get building won't cut the mustard.

4. We don't have enough State houses

Housing New Zealand (HNZ) has sold more 1700 homes since 2008.

Between 2013 and 2015, HNZ built just a third of the 2000 houses it was supposed to have built in that period.

The Government claims new houses are being built to meet demand.

But sites like the 8000sqm HNZ site in Mt Albert have sat empty. We could have 70 families living in that spot. Instead they're living in cars and garages.

5. We can't keep up with immigration

Last year, New Zealand had a record net gain of 70,000 migrants.

These included 213 bakers, 600 café managers, 132 hotel service managers and 683 retail managers. Many will be based in Auckland.

Around 132 new people arrive in Auckland every day and we provide houses for just 80 of them.

Skilled immigrants are essential  but really, can we not pop down to WINZ and train someone to make coffee?